Free trade deal may need MPs' okay

By BRIAN FALLOW

The Government will announce next week whether Parliament will decide if New Zealand signs the free trade deal with Singapore initialled by officials yesterday.

Weekend Business understands the agreement will not only be sent to a select committee for public submissions, but be put to the vote in Parliament.

Traditionally, ratification of treaties is a prerogative of the Executive, in effect a cabinet decision.

Parliament, for example, did not vote on New Zealand's membership of the World Trade Organisation, although it did have to pass amendments to trade and copyright legislation to make New Zealand law compatible with membership.

In addition to misgivings about that system, another factor inclining the Government to refer the matter to Parliament is that it is an issue on which the Coalition partners may agree to disagree.

The text is not expected to be made public until the cabinet has seen it on Monday. It is understood to include a clause to reassure Maori that nothing in the agreement will impede the Government's ability to honour Treaty of Waitangi obligations or work on closing the gaps.

Opposition parties have raised objections to any provision for special treatment for Maori, but a spokesman for Trade Minister Jim Sutton said a treaty reservation had been part of the negotiating brief since talks began last year.

Singaporean concerns about the impact of the treaty on Singaporean investment in NZ have apparently been addressed, and may have arisen from a failure to understand that private assets are off-limits in addressing treaty grievances.

Most trade between New Zealand and Singapore is already free, as both countries have been unilateral liberalisers. Textiles, clothing and footwear are the major exceptions.

Mr Sutton said the agreement would improve New Zealand firms' access to the education, telecommunications, environmental, medical, architecture and engineering sectors.

He said there would be a mechanism to address recognition of professional qualifications. Both countries would bind their existing investment regimes. For example, if a future New Zealand Government were to lower the threshold for approval for non-land investments from its current $50 million, that would not apply to Singapore.

Doubts have been raised about the robustness of the agreement's rules of origin, which require that at last 40 per cent of the cost of the goods ex-factory has to have been incurred in Singapore or New Zealand.

Mr Sutton said Customs would analyse imports from Singapore to identify potential areas of duty evasion. Where claims for preferential entry were challenged, the onus would be on the importer to show that duty-free entry was valid.

Tim Groser executive director of the Asia 2000 Foundation, who in his previous job as a Foreign Affairs official led the initial negotiations with the Singaporeans, said the adjustments New Zealand would have to make as a result of the deal are "next to zero," given how open the two economies are already. The flipside of that is the commercial gains to be made are modest.

But the agreement should be seen as strategic, as a step towards a wider link-up of CER and the Asean free trade area, now the subject of preliminary discussions.

"Even if that does not come off, it is a huge step forward for our relations with Asia to have a CER-type agreement with an Asian country.

"These sorts of agreement give rise to cooperation in other areas. Expect to see closer cooperation among research institutions, for example."